Reed Smith In-depth

Key takeaways

  • Businesses need to carefully review their customer practices in light of new subscription rules and CMA’s enforcement powers
  • New obligations around unfair practices aimed at cracking down on fake reviews and drip pricing

Autoren: Elle Todd Alicja Lysik

As consumers we are now all too familiar with the importance of reviews and the convenience of subscription services, yet the frustration of uncovering hidden fees or grappling with subscription cancellations can be equally common. Meanwhile, businesses are already navigating a complex legal landscape and restrictions on targeted advertising-based business models and are about to face more regulatory requirements.

The Digital Markets, Competition and Consumers Act (DMCC) is a sprawling piece of legislation which covers many different areas including competition provisions. In this article we focus only on the new requirements for traders offering subscription contracts, and requirements regarding unfair commercial practices.

Subscription contracts

1.    Before the subscription starts: Pre-contract information

The DMCC is much more prescriptive than existing UK consumer law, requiring businesses to provide consumers with specific information before entering into certain subscription contracts.

According to the DMCC, subscription contracts are agreements that provide for an automatically recurring or continuous supply of goods, services or digital content to the consumer for either an indefinite or fixed period, making the consumer automatically liable for each supply or recurring liabilities. The definition also includes contracts that initially offer goods, services, or digital content for free or at a specified rate for a certain period, and then automatically impose payments or higher charges after that period. Some contracts are excluded from this definition, including contracts for utilities (gas, electricity, water and heating), insurance and financial services, medical prescriptions, rental contracts, childcare and gambling. This list is non-exhaustive and may be amended by the secretary of state.